Typical Hierarchy of Investment Banks

Typical Hierarchy of Investment Banks

Investment banks have a rigid and strict hierarchy that is comparable to a military rank, where each rank means a great deal and huge perks. Typical hierarchy of investment banks cuts across almost all investment banks, although non-US banks may have different titles for each level. However, regardless of the titles, their job descriptions tend to be consistent across banks.

1. Investment Banking Analyst

Almost all investment banking analysts enter the industry as fresh graduates from the best business schools. Most investment banks have a two-year program, after which the analyst rises to the associate rank. The majority of an analyst’s work involves researching companies, building financial models in Excel, and creating PowerPoint presentations that the bank uses to communicate ideas to potential clients. An analyst earns between $100,000 and $150,000 annually.

2. Investment Banking Associate

After working for two or three years as an analyst, you are promoted to the associate rank. Alternatively, you can enter the associate rank after graduating from a top MBA program. Apart from watching over the analysts, an associate spends most of the time talking to clients and seeing what they need. They may also work alongside analysts in preparing pitch book materials and in financial modeling. The salary of an associate varies between $110, 000 and $300, 000 or even more.

3. Vice President

An associate rises to the rank of a vice president after working for 3 to 4 years. The vice president speaks to clients on the call and updates them on how things are progressing. By default, the analysts and associates fall under the vice president, and the VP ensures that PowerPoint presentations and financial models are built in the right way. They have an active role in executing deals with clients, and therefore earn a higher salary than associates and analysts. The pay ranges between $150, 000 and $450, 000.

4. Director/Senior Vice President

The senior VP may also be called a director or principal, depending on the company. To become a VP, you must have worked in an investment bank and risen up the hierarchy. It is unheard of for someone to get in from outside the investment bank like is the case for associate and analyst ranks. A senior VP speaks a lot with clients and acts as a linkage between the clients and the team in the lower ranks. The pay ranges between $250, 000 and $1.5 million inclusive of bonuses.

5. Managing Director

The managing director sits at the highest level of an investment bank hierarchy, and he is responsible for the profitability of the bank. It takes a long time, skill and even luck to get to this level. The work of the MD is to know how all the deals are progressing and what is happening in the political or economic environment that is likely to affect the bank operations. Most of the time is spent winning clients, meeting potential investors and building relationships. He makes between $500, 000 and $4 million. On a good year, the gross income may hit $10 million. If the bank is not making money, he takes the blame.

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